Taxes
Business mileage is something you'll need to take into account as part of running a business and paying tax. The good news is that HMRC allows you to make claim business mileage on your taxes.
What are my motor vehicle expenses?
If you're like most self-employed people, your motoring expenses will comprise partly business expenses and partly private expenses. On the one hand, you use your vehicle for shopping, going to the gym and visiting great aunt Mabel, while on the other, you need to visit clients - and occasionally the bank manager.How do you separate the two? For tax purposes, HMRC gives you two options:
- You can tot up all your motoring costs for the entire year and calculate the business percentage. Note that it might be possible to claim tax relief on part of the vehicle's capital by claiming capital allowances.
- You can claim a fixed-rate allowance. This includes the cost of buying the vehicle in your mileage claim.
Most small businesses find the second method more convenient. You should note, though, that you can't adopt a combination of both methods. And once you've decided on one route, you're stuck with it until you invest in a new vehicle.
